Bengaluru rents rise as office fundamentals remain resilient despite Q2 blip
Continued rental growth amid rising supply and softer quarterly leasing signals resilient premium-space demand, which may sustain investor interest while increasing competition in newly supplied submarkets.
Bengaluru office rents rose 5.4% year-on-year in Q2 2026 despite leasing falling 24% quarter-on-quarter and vacancy increasing 80 basis points to 11.4%.
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Rents increased by 5.4% in Q2.
Bengaluru's office market recorded a temporary slowdown in the second quarter of 2026, with leasing volumes falling 24% quarter-on-quarter to 4.1 million sq ft, according to JLL. Despite the quarterly dip, the property consultancy said first-half leasing remained stronger year-on-year, suggesting the softness could be a short-term blip.
JLL attributed the Q2 moderation to uncertainty around corporate portfolios and headcount projections, driven partly by AI adoption and geopolitical developments affecting business decision-making.
The technology sector accounted for 50% of quarterly leasing, followed by flexible workspace operators at 26%. The city's SBD submarket dominated take-up with a 76% share, with the SBD City cluster alone accounting for 44.1% of leasing within the submarket.
New office supply surged 73% year-on-year to 5.8 million sq ft in Q2. SBD accounted for 5 million sq ft, or 85.6% of quarterly additions, while Electronic City contributed 13%. Within SBD, the ORR South East cluster accounted for half of new supply.
The influx of space, combined with slower leasing and limited pre-leasing in newly completed buildings, pushed overall office vacancy to 11.4%, up 80 basis points quarter-on-quarter. JLL noted that vacancy increased in SBD and Electronic City as new supply came online, while Whitefield recorded a quarter-on-quarter decline.
Rental growth, however, remained positive. Average rents rose 0.7% quarter-on-quarter and 5.4% year-on-year, with Whitefield recording the strongest quarterly increase at 1.3%. The CBD posted the highest annual rental growth at 9%.
According to JLL, fresh leasing in premium-grade buildings in prime locations continued to support rental momentum despite near-term softness. Strong investor interest in office assets also continued, with yields compressing by 20 basis points year-on-year.
Looking ahead, JLL expects Bengaluru to remain one of India's most active office markets, supported by expansion by global companies in technology and back-office operations. The consultancy expects future demand to broaden across manufacturing, healthcare, BFSI, flexible workspaces, engineering and R&D, alongside changing workplace requirements.
JLL expects new supply to continue entering the market while robust leasing supports rental growth. It also sees capital values rising as sustained occupier demand and resilient fundamentals attract both domestic and international investment.